The contemporary concepts of economic advancement are largely based on the concepts of

collaboration; cooperation and competition for developed countries include an entire range of
governmental functions, including sectoral policy reform, economic integration, privatisation, public
sector enhancement, labour market competitiveness, investment climate enhancement, e-government,
soft infrastructures for developing a knowledge economy, macroeconomic management and effective
long-range planning. The weight of the public sector constitutes a serious impediment to more rapid
growth for many countries. Importantly, the large expenditure burden it requires does not always
translate into an efficient and equitable distribution of services. Such performance is reflected by the
public sector efficiency and governance in promoting the economic advancement of a country
(Rajagopal, 2006a).

Competition is a pivot of economic development, which allows cooperation to lead the competition
many times. The inadequate functioning of some product markets and lack of competition has
undermined the dynamism of the economy, in particular, productivity growth (OECD, 2006). While
discussing economic environment, Kohn seems to be pro-competition and states that despite the
enormous discrepancy between perfect competition and the actual state of our economic system,
competition is still the stated ideal. Businesspeople and public officials use the term as an honorific,
discussing ways in which they can make their companies and countries more competitive, and never
pausing to ask whether a competitive system really is the best possible arrangement (Kohn, 1986, p.70).

The need for economic as well as market competition has been endorsed by many applied studies
conducted to evidence the driving factors in the economic growth. Market competition is essential for
any economy to be efficient. In order to develop competition in a transition economy, it is
conventionally thought that privatisation should take place first. This wisdom has been challenged by
the Chinese reform experience of the last two decades, which modified the incentive structure of state
enterprises and created markets and market competition in the absence of large-scale privatisation.
China’s experience, however, raises the question of whether its chosen type of reform is sufficient to
promote competition in a market dominated by public firms (Shaojia and Garino, 2001). It has been
observed in the Kohn’s readings that though he delineates competition as a driver of growth, at the
same time he argues that is not a healthy psychological attribute to nurture growth of either an
individual or an organisation. He discusses that the distinction between trying to do well and trying to
beat others is not the only explanation we can come up with in the competition’s failure. Competition
also precludes the more effective use of resources that cooperation allows. The dynamics of cooperative
effort make this arrangement far more efficient, while competitors are hardly predisposed to like and
trust each other enough to benefit from it (Kohn, 1986, p.61).

The contemporary economists, however, favour competition as an important tool for economic growth.
They discuss whether standard procedures and widely accepted insights of competition policy remain
valid when one deals with potentially anti-competitive conduct in innovative industries. The question of
appropriateness arises because competition in these industries displays features that are radically
different from those encountered in traditional sectors of the economy. Competition is for the market
rather than in the market; the dynamic aspects of competition matter more in knowledge-based
industries (Encaoua and Hollander, 2002). In reference to international economic development, the
competitiveness among nations in exploiting resources has certainly been proven as a major attribute. It
has also been noticed that global competitiveness is the key element to survive in business, and it is a
task that the business sector along with governments have to confront. Since the latter half of the 1980s
and all through the 1990s, issues of reforms have swept the economies of Latin America and the
Caribbean countries (Rajagopal, 2005).

Competition may be characterised as striving together to win the race, not to destroy the other
competitors, from the point of view of the supporters of globalisation. The local market competition is
targeted towards the customers, and the competitors strive to win the customer, temporarily or
permanently. In the business-to-business process, however, the competition may turn more tactical and
strategic in order to outperform the rival firms. In this way, competition can be seen as a regulated
struggle. Competitive roles can be radically altered with technological advances or with the right
marketing decisions (Rajagopal, 2006b). In the growing competitive markets, the large and reputed firms
are developing strategies to move into the provision of innovative combinations of products and
services as ‘high-value integrated solutions’ tailored to each customer’s needs than simply ‘moving
downstream’ into services. Such firms are developing innovative combinations of service capabilities,
such as operations, business consultancy and finance, required to provide complete solutions to each
customer’s needs in order to augment the customer value towards innovative or new products. It has
been argued that the provision of integrated solutions is attracting firms traditionally based in
manufacturing and services to occupy a new base in the value stream centred on systems integration,
using internal or external sources of product design, supply and customer-focused promotion (Davies,
2004). However, competition varies strongly with the values associated with the brand, industry
attractiveness, knowledge management and ethical issues of the organisation (Rajagopal and Sanchez,
2005).

The contemporary ideology on the competition emphasises largely on the competitive environment,
which contribute to various dimensions of rivalries. It has been observed that the low-end competitor
indulging a company in offering much lower prices for a seemingly similar product, has been the
common fear of each industry leader managing his business among competitors. The vast majority of
such low-end companies fall into one of the four broad categories that include strippers, predators,
reformers or transformers (Potter, 2004). The global companies often try to promote competition
among their salespeople by offering incentives to the best performer, and marketing planners develop
strategies to defeat their competitors as a way to ensure their company’s success. Hence, it may be
stated that in the corporate business management practices, competition is largely accepted as a
desirable and effective way to improve performance (Armstrong, 1988). One would certainly expect
competition to be more effective under some circumstances. It is surprising to learn how difficult it was
to find empirical evidence about situations in which competition proved superior, especially when one
may look at the range of evidence examined by Kohn. However, he emphasises that the

competition leads to producing a less positive regard for people of different ethnic backgrounds. Many
organisations feel that in a growing competition, establishing strategic alliances would better control the
competitor’s penetration. They recognise that alliances and relationships with other companies of
repute are fundamental to outwit, outmanoeuver and outperform the competitors through better
branding, better service and tagging global brands to assure the quality of goods and services. Alliances
and relationships thus transform the concept of competitor.

A competing firm intends to push the aggregate sales in the short run by leveraging the marketing mix
components, particularly those related to price and promotion, to get short-run market advantages.
Such efforts, however, may lead to higher risk and uncertainty to sustain its competitive strategies in a
given market causing variability in the market share of the firm. It is necessary for the managers to look
into the cause-and-effect chain while adapting the competitive marketing strategies as sometimes it
may induce irreversible results. Alternatively, if a firm chooses to develop its business through
cooperation with the existing firms in a given market, the firm may derive value-centred goals with focus
on strategic alliance. The alliance firms would have advantage to share risk, uncertainty and profit in a
given market over a specified time. The managers of a firm may opt to lean towards cooperation as a
safe and mutual growth driver to go international or expand their business in the domestic market with
long-run business equilibrium. Proper choice of strategy, however, is situation- and firm-specific, and a
more effective approach for managers may be to act on the particular circumstances in which they find
themselves (Krubasik, 1988).

The concepts of cooperation and competition are not opposite to each other but may be determined as
supplementary to the growth in a given society. We may find pro-Kohn ideology brought into practice in
Japan wherein the puzzle inherent in cooperative export strategies has been solved as to be successful;
firms have to cooperate in one market in order to compete in another. As companies in other Asian
countries, as well as in transition economies, engage in cooperative export strategies to increase
competitiveness, these indicators provide a useful tool in determining the likelihood of domestic
cooperation that makes such strategies possible (Ulrike, 2004). It has been observed that strategic
planners in organisations of the future need to consider the potential benefits of collaborating,
cooperating and coordinating with others serving the same markets, rather than pursuing conventional
‘competition’. This new mindset may be delineated asco-opetition. It has been observed that the
competitive psychology represents oneself as being better than others, and stresses the winning of
more resources at their expense. The antithesis is active cooperation, wherein one embraces
competitors in partnership to the benefit of all. It is argued that the new business environment demands
new kinds of business relationships, and that co-opetitive partnerships have emerged as a more
effective response to changed environmental threats and opportunities (Mosad, 2004).

There has been much work done to determine whether competition is better than cooperation, and
some work has compared competition with doing the best for oneself. The studies emerge from diverse
fields, but primarily from education, sports, the performing arts and psychology. However, the results
have been consistent, clear-cut, and surprising: competition typically results in less creativity, poorer
performance, and reduced satisfaction. It has been a debatable issue ever since to weigh the role of
competition and cooperation in social and economic development and at times the arguments favouring
each tool seem to be appropriate. One would certainly expect competition to be more effective under
some circumstances. Kohn has described varied and interesting research outcomes to support his
arguments on cooperation socially, anthropologically and economically. Competition has been identified
by some researchers as an aggressive tool to achieve market power, while cooperation is determined as
a management instrument for defensive positioning against competition. Though both forms of
organisational tools lead to growth and development, cooperation is considered to be more balanced
and welfare-oriented (Rajagopal, 2006c). Hence, there has been major emphasis on cooperation in
international trade among the nations who have joined the stream of globalisation. Collaboration across
the supply chain has become a crucial element in the creation of business value in such a complex
manufacturing environment. The Collaborative Planning, Forecasting and Replenishment (CPFR) process
is a powerful tool to enhance the cooperation between partners from upstream to the vendor/suppliers,
and downstream to the customer. In fact, in varied business situations, both competition and
cooperation are used to build organisational and customer values. The optimal portfolio demand for
products under competition varies strongly with the values associated with the brand, industry
attractiveness, knowledge management and ethical issues of the organisation. The extent of business
values determines the relative risk aversion in terms of functional and logistical efficiency between the
organisation and supplier, while the switching attitude may influence the customers, if the
organisational values are not strong and sustainable in the given competitive environment (Rajagopal
and Sanchez, 2005). The success of a firm largely emerges from the three different management
practices that refer to the use of information on customer value, competition and costs (Rajagopal,
2006b). It is argued in a study that the success of these practices is contingent on relative product
advantage and competitive intensity, which reveals that there are no general ‘best’ or ‘bad’ practices,
but that a contingency approach is appropriate. This may be competition, collaboration and strategic
cooperation (Ingenbleek et al., 2003). Some arguments are contradictory with expressions such as
competition will lower achievement markedly for such individuals, which seriously affects the
performance of the whole group (class, corporation, society). One way a competitive culture deals with
those who find competition unpleasant, of course, is to accuse them of being afraid of losing. It has been
argued that across many fields, the assumption that competition promotes excellence has become
increasingly doubtful. Such competitive pressures ultimately benefit no one, least of all the public.
Working against, rather than with, colleagues tend to be more destructive than productive. This
corroborates the bulk of evidence on the topic – evidence that requires us to reconsider our
assumptions about the usefulness of competition. However, competition is an essential constituent of
development and has been evidenced by a large number of research studies in reference to animal and
human behaviour, social, national and international growth. The more competition there is, the more
likely are firms to be efficient and prices to be low.

Economists have identified several different types of competition. Perfect competition is the most
competitive market imaginable in which everybody is a price taker.It is argued that the propensity to
cooperate may be negatively affected by competition.

Experimental evidence supports this hypothesis. In a set of three experiments in which different degrees
of competition characterise the markets, participants reduce their contributions to a public project as
the degree of competition increases (Bissey et al., 2003). Not every one thinks along with Alfie Kohn to
muddle with the arguments on whether cooperation is better than competition. He tries to determine
that fix between these two practices and compares competition with doing the best for oneself to some
extent. However, the cooperation and partnerships are justified, only if they stand to yieldsubstantially
better results than the firms could achieve on their own. And even if they are warranted, they can fail if
the partners enter them with mismatched expectations. In matters of the heart, it may be better to have
loved and lost, but in business relationships, it is better to have headed off the resource sink and
lingering resentments a failed partnership can cause (Lambert and Knemeyer, 2004). Kohn states, while
discussing the issues related to economic competition, that when regulation is cut back in order to bring
more competition to the marketplace, we again witness the true consequences of this competition: its
advantages often prove illusory, or short-lived, or selective, which has been viewed to be controversial
by many corporate analysts (Kohn, 1986, p.76).

The competition among firms is increasingly shifting from company versus company to supply chain
versus supply chain. Benefits can be grouped as customer-oriented benefits, productivity benefits, and
innovation-related benefits. Factors supporting collaboration are observed as trust, common goals for
cooperation and existence of cooperation mechanisms, while barriers are related to three factors such
as lack of trust, risk-benefit evaluation and lack of common goals for cooperation (Cetindamar et al.,
2005). The collaboration in the business strategy may be considered analogous with cooperation in
reference to the prevailing concerns of the globalisation. On the contrary, heavy competition in India in
almost all product categories has been experienced owing to diversifications by large and medium
companies and increased entry of multinationals, which has restricted the growth of domestic
companies. Previously, large companies enjoyed high profit margins by targeting premium-priced
products in the upper strata of Indian society. High levels of competition from equally reputed brands
have not only decreased the companies’ market share, but also created price wars, reducing profit
margins and limiting market growth. This has motivated companies to consider the lower classes and
the rural segments, which they had previously ignored (Dubey and Patel, 2004). In reference to these
two dissimilarities in the business development process, it may be stated that in practice, Kohn’s
ideology of cooperation as a tool to replace competition, thus cannot be generalised.

The strategic dilemma that managers face is to what extent should they compete with competitorsand
to what extent cooperate with competitors. It has commonly been stated that the driving forcebehind
creating effectiveness is competition. On the other hand, there is a demand for cooperation,as the
actors must create long-term relationships based on a mutual interest and adaptations in orderto know
what the interacting partner is capable of doing (Kanter 1994). In business network bothcooperation
and competition is needed in relationships between competitors, but the two types ofinteractions
create progress in slightly different ways (Bengtsson & Kock 2000). By competitionfirms are forced to
undertake measures not always demanded by the end customers for gaining astronger position relative
to their competitors. Competition thereby gives rise to pressure to developnew products and markets
(Bengtsson 1994, Porter 1990, Sölvell & Bengtsson 1996). The benefitswith cooperation are also related
to development, but the reason for cooperation is rather the accessto resources than a driving-force or
pressure to develop. Bengtsson and Kock (1996) state that by cooperation a company can gain time,
competence, market knowledge, reputation, and otherresources of importance for its business. The
creation of new products can also be more costefficiently as the involved actors contribute with their
core competences. Extended, this means thatactors can stay within their core business and still offer a
wider range of problem solutions to theirbuyers or end customers than a single company can.

Cooperative relationships are built on a mutual interest to interact. Competitors are usually involved in
direct or indirect relationships with an aim to destroy or harm the other. This is due to the fact that the
interests of competitors cannot be fulfilled simultaneously. These relationships maywell contain
conflicts. Competitors competing often try to avoid interaction, whereas competitors cooperating try to
maintain the interaction. Cooperative relationships are more easy to grasp as they usually are visible and
built on a distribution of activities and resources.

Bengtsson and Kock (1999) give the following characteristics concerning cooperation andcompetition:

Cooperation: The exchanges are frequent, comprising business, information and social exchange. All
types of bonds can arise, though social, knowledge and legal/economic bonds are the most frequent
ones. Though the competitors cooperate it does not mean that they do not compete and perhaps even
distrust each other. This relationship has similarities with the value chain and can have a formal or
informal character. Formal agreements are present if the competitors have formed strategic alliances or
other partnerships. Informal agreements are built on social norms and trust. These norms, and
sometimes formal agreements, adjust the distribution of power and dependence among the
competitors, which means that conflicts are rare. Furthermore, competitors have common goals, and
proximity between them is based on functional and psychological factors.

Competition: An action-reaction pattern arises as competitors follow each other; if one of the
competitors launches a new product line, the other will immediately follow. Interaction is therefore
simple and direct. Power and dependence are equally distributed among the competitors, based on
their positions in the business network. Proximity or distance is based on functional and psychological
factors. Norms are based on informal rules as the acceptance of rules-of-play are widespread, and
competitors set their goals independently. A common feature is that these goals are similar in structure
and they can only be reached by acquiring resources from the same buyer.

In other words the competition relationship is a zero-sum game. A long line of economic literature
argues that competition among firms benefits consumers via lower prices (for an overview, see Kovacic
and Shapiro (2000)).1Competition can benefit consumers in other ways as well: competition may lead to
greater product variety, higher product quality, and greater innovation, which drives productivity
growth and helps lift living standards (Hotelling 1929; Aghion et al. 2005; Shapiro 2012).2When there is
little or no competition, consumers are made worse off if a firm uses its market power to raise prices,
lower quality for consumers, or block entry by entrepreneurs. A firm with market power recognizes that
if it reduces price to gain more customers, it loses revenue on the existing customers it already has.
Thus, it may set a higher price and provide a lower quantity of its product than would maximize societal
welfare.

Competition pushes firms to reduce price below this level, both to gain share from rivals, and in
recognition that higher prices can be profitably undercut by competitors who are similarly trying to
increase their sales. Alternatively, monopolists may choose not to upgrade quality or variety, which
would also leave customers worse off than if the market had competitors. And monopolists may be less
rigorous in pursuing efficient cost reductions, for as Sir John Hicks (1935) famously wrote, “the best of all
monopoly profits is a quiet life.”

Competition between firms may also help workers. In the same way that two firms might compete
against one another and lower prices to entice consumers to purchase a product, firms competing to
hire from a specialized labor market may raise wages to attract and retain workers. In addition, small
businesses and entrepreneurs can benefit, for example, when upstream firms compete against each
other for the opportunity to supply a product to a downstream small business or entrepreneur. If an
entrepreneur sells its products to downstream firms rather than to end-users, it would benefit from
there being a greater number of downstream firms to which it can sell products—the greater the
number of downstream firms, the better the ability to negotiate a good price for the products it sells.
Thus, whether the business model of an entrepreneur is business-to-business or business-to-consumer,

competition among upstream firms and among downstream firms helps the entrepreneur grow his
orher business by creating and capturing value in the marketplace (Brandenburger and Stuart 1996).